Tuesday, 15 March 2011

Failing the tango... the stop-loss logic

I have failed in my stocks lesson... Despite still remembering what Mr Hu Li Yang said from Money Weekly and what I wrote in my previous entry - Knowing when to 'breakup' with your stock.

Stop loss at 10%, stop loss at 10%, stop loss at 10%... darn.

Bad news (market, earning growth...), multiple "black crows", issu-ing of bonus shares, and other technical indicators are some signals of imminent price drop.

However, many of us are over-confident in our stocks. It is not easy to let go - greed and disillusions often over-ride rational decisions. I wonder when is it considered too late...

To sell at 20% gain or do a selling-up to garner slow profits. That is the 2nd part to the lesson.

The problem is - the tango seems to be one-directional thus far.

One important thing I have come to realise is - learning to harvest is just as important as learning to stock-pick. It's just like picking the right seed to plant, then watering it daily, then harvest before it starts to rot.

It takes years of skills and experience to do as what Uncle8888 says:"Make hay while the sun shines and also pull out the weeds."

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